Benchmarks trade in fine-fettle in early deals

Indian equity benchmarks have made gap-up opening and are trading in fine-fettle in early deals on Monday, following Asian peers after positive development in US-China trade negotiations. Sensex and Nifty have reclaimed their crucial levels of 39,600 and 11,800, respectively. Investors will be eyeing manufacturing PMI data to be out later in the day. Traders took encouragement with report the Reserve Bank of India (RBI) has relaxed the leverage ratio (LR) for banks to help them boost their lending activities. The leverage ratio stands reduced to 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks effective from the quarter commencing October 1, 2019. Some support also came with report that foreign investors infused a net amount of Rs 10,384 crore into the Indian capital markets in June and remained net buyers for the fifth month in a row on expectations of continued economic reforms. Besides, kicking off celebration to mark two years of the GST implementation, the finance ministry will come up with further reforms in the indirect tax system with introduction of new return system, rationalisation of cash ledger system and a single refund-disbursing mechanism, among others.

However, market participants overlooked the Reserve Bank of India’s (RBI) statement that current account deficit (CAD) increased to $57.2 billion or 2.1% of GDP in FY19 as against 1.8% in the previous year. The CAD had stood at $48.7 billion in FY18. For FY19, the deficit widened despite a narrowing of the same in the March quarter to 0.7% of GDP or $4.6 billion, as against $27.7 billion or 2.7% in the December quarter and $13 billion or 1.8% in the March 2018 quarter.

On the global front, Asian markets were trading mostly higher after US President Donald Trump and Chinese President Xi Jinping agreed to hold off on slapping additional tariffs in an effort to resume trade talks. Back home, on the sectoral front, power stocks came in focus amid report that supply of coal to the power sector by state-owned Coal India declined by 2.6% to 80.9 million tonnes (MT) in the first two months (April-May) of the ongoing fiscal as compared to 83.1 MT of coal supplied in April-May period of FY’18. 

The BSE Sensex is currently trading at 39637.74, up by 243.10 points or 0.62% after trading in a range of 39541.09 and 39649.47. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.19%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Realty up by 0.86%, Metal up by 0.84%, Auto up by 0.82%, Power up by 0.82%, Bankex up by 0.69%, while Oil & Gas down by 0.50%, Telecom down by 0.43%, Energy down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.67%, NTPC up by 1.56%, Tata Steel up by 1.32%, HDFC Bank up by 1.21% and Hero MotoCorp up by 1.18%. On the flip side, Maruti Suzuki down by 0.20%, SBI down by 0.19%, Bharti Airtel down by 0.14%, HCL Tech down by 0.14% and Hindustan Unilever down by 0.14% were the top losers.

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the government's fiscal deficit, or the gap between the government's expenditure and revenue, touched 52% of the Budget Estimate (BE) for the full year in the first two months (April-May) of 2019-20. In absolute terms, the fiscal deficit was Rs 3,66,157 crore, while it was 55.3% of 2018-19 budget estimate in the year-ago period.

The data showed that revenue receipts of the government during April-May, 2019-20 was 7.3% of the BE. In the year-ago period also, the revenue receipts were at similar level. However, the capital expenditure was only 14.2% of the BE as compared to 21.3% in the year-ago period. Total expenditure during April-May period stood at Rs 5.12 lakh crore or 18.4% of BE. It was 19.4% of BE in the corresponding period of the last fiscal.

In the Interim Budget passed in February, the government had estimated the fiscal deficit at Rs 7.03 lakh crore for 2019-20. The government aims to restrict the fiscal deficit at 3.4% of the Gross Domestic Product (GDP) during the current fiscal, same as the last financial year.

The CNX Nifty is currently trading at 11847.25, up by 58.40 points or 0.50% after trading in a range of 11830.80 and 11860.85. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 1.99%, Eicher Motors up by 1.82%, Bajaj Auto up by 1.63%, Indiabulls Housing Finance up by 1.60% and NTPC up by 1.41%. On the flip side, Zee Entertainment down by 1.21%, Bharti Infratel down by 1.05%, Indian Oil Corporation down by 0.96%, BPCL down by 0.84% and Ultratech Cement down by 0.76% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 402.50 points or 1.89% to 21,678.42, Taiwan Weighted strengthened 168.53 points or 1.57% to 10,899.36, Shanghai Composite gained 55.92 points or 1.88% to 3,034.80, Straits Times advanced 41.71 points or 1.26% to 3,363.32 and Jakarta Composite soared 18.08 points or 0.28% to 6,376.71, while KOSPI fell 3.32 points or 0.16% to 2,127.30.